PART II 3: Human Capital

PART II

3: Human Capital

Human capital is a summary term for the investment in education, training and other qualities which increases the worth of individuals to society generally. Although the importance of different levels of human capital is most evident in the labour market, where differences are often reflected in income, the concept has a wider relevance. Investment in the health of an individual has obvious benefits for society at large, not least with respect to welfare payments, as do the skills and talents which individuals are able to bring to bear in the general fields of leisure and recreation.

3.1 Employment, welfare payments, workplace skills and education

Employment is obviously a key issue in the lives of migrants. Skilled business stream immigrants, for instance, are selected on the basis of the jobs they will do and the investment they will make. Humanitarian stream migrants also need employment in order to establish a life in their adopted land and to reduce their dependency on welfare payments. In this sense, employment is of crucial economic significance to both individuals and society at large.

Employment is important in other ways however. For example, employment helps to give a person identity, social contact (Peters 1995) and a shared sense of belonging. Working hours provide ‘shape’ to the lives of all Australians in the paid labour force. Employment is a way in which people develop the skills of collaboration and a route to self-development and realisation of personal potential (Maslow 1998). Moreover, contact through employment can help in the social adjustment of migrants in Australia. In this sense, the skills and the prior training of migrants are critical concerns because they influence the work opportunities open to immigrants. Important, too, is any training and skills acquisition undertaken after arrival. These are fundamental components of human capital. Also important is the quality of immigrants’ working lives and the satisfaction they derive from employment. Such experiences can also influence the work ethic of future generations.


Welfare payments, risks and recipients

As a result of Australia's migration policies, migrants (taken as a whole) have higher levels of skills and qualifications than the Australia-born population. This positive impact on the economy and on Australia’s stock of human capital is well reported (for instance, Garnaut 2002; Garnaut et al. 2003). Despite this general recognition, myths have developed and endured with respect to levels of welfare payments paid. For example, there is widespread belief that migrants are uneducated and take the jobs of other Australians or that they live on welfare (C. Richardson 2002). The opposing view is supported by one study (Birrell and Jupp 2000) which found that, overall, overseas-born persons had lower welfare-recipient rates than other Australian residents.

Welfare payments available to migrants are, of course, dictated to a large extent by government policy and, for the past decade, additional limitations have applied. For example, for non-humanitarian migrants, two years must elapse before most social security payments can be accessed (HREOC

2005). In addition, most new immigrants are not eligible for disability or aged pensions until ten years after their arrival in Australia. Nevertheless, higher welfare-recipient rates apply for some migrant groups with low levels of proficiency in English. This probably reflects relatively limited possession of post-school qualifications or work experiences which would allow them to compete for jobs in the Australian labour market (Birrell and Jupp 2000, p. vii).

There is recognition that the two-year waiting period for income support for most migrants could add to risks of poverty and homelessness (Senate Community Affairs Reference Committee (SCARC) 2004). Without provision of appropriate settlement support, work opportunities and educational opportunities for children, immigrants might not be able to fully participate in and to become productive members of Australian society. Furthermore, the SCARC found that failure by skilled migrants to have their qualifications recognised or to have access to Programmes to quickly and inexpensively upgrade qualifications diminished abilities to find work and to acquire higher standards of living.

Historically, high welfare-recipient rates were more likely to be associated with the early periods of settlement; with increased settlement time, welfare levels have been shown to fall significantly (Birrell and Jupp 2000). This is reassuring as one of the long-term concerns about migration expressed in the focus groups centred on the risk of ongoing welfare dependency. While immigrants generally access welfare less than Australia-born residents, welfare use does increase in line with age on arrival in Australia (Birrell and Jupp 2000). Parents accepted under the Family Reunion scheme naturally tend to be older immigrants. Whilst older persons might not be so active in terms of paid employment, the important role that grandparents play in providing emotional family support and unpaid child-care should not be disregarded.

Employment status and qualifications for major birthplace groups has been influenced not only by age but also by time of arrival in Australia. Some long- established birthplace groups – such as those from Italy, Greece and Malta – have comparatively low levels of tertiary education (Hugo 1999). One reason was due to post-World War II demand by the then buoyant manufacturing sector for unskilled workers. By contrast, high proportions of more recent arrivals, especially from the USA and some Asian countries including Malaysia and India, have university degrees or diplomas. Nevertheless, not all recent migrants are highly qualified; more recently arrived groups from Cambodia, Thailand and Viet Nam have relatively low proportions of migrants with degrees.

Differences in migrant qualifications over time also reflect in part the growing availability of university and college education round the globe (and, for migrants, in Australia after arrival) and the fact that university or college education is much more attainable now than it was for the early settlers after World War II. In part, too, they reflect the fact that selection for migrant entry visas is a competitive process in which those with formal qualifications have better chances of success.

Examination of qualifications and occupational status of migrants is relevant to this discussion because human capital which migrants bring with them or which they subsequently acquire through education and training is commonly measured with respect to its application in the work place. This aspect has been examined more fully in Appendix 3A.1 (with reference to Tables 3A.1.1 and 3A.1.2 and related discussion). It is not surprising that low occupational profiles tend to parallel migrant groups with low levels of university and college education. Notwithstanding this, there appears to be an anomaly in the case of migrants sourced from some countries (such as Viet Nam and, to a lesser extent, North Africa and the Middle East) which had strong representation among both those with high formal qualifications and jobs of low occupational status. This suggests either considerable variability within the category of Viet Nam-born migrants in terms of their labour force experience and lack of career choices or significant under-use of formal qualifications. Whether under-use might be related to lack of recognition of qualifications or language difficulties – or both – can only be speculated upon.

Time of arrival in Australia has also influenced employment status for major birthplace groups. Those who arrived in the early post-war period have aged to the point where high proportions have retired and are therefore out of the labour force. In contrast, some migrant birthplace groups (such as those from Sub-Saharan Africa, the Philippines, the Americas and Southern and Central Asia) have strong representation among the ranks of the employed.

Labour force participation rates according to birthplace are summarised in Table 3.1. ABS (2004c) statistics show that 66 per cent of Australia's migrants⁶ were employed; this rate was similar to that of people born in Australia (64%) (ABS 2006c). Additional statistics and commentary presented in Appendix 3A.1 point to business migrants on temporary visas (83%) and permanent visa holders (79%) having the highest rates of employment and also high participation rates (88% and 82% respectively) (refer to Table

3A.1.3). The labour force participation rate for migrants of 70 per cent was high compared with 58 per cent for all persons born overseas and 65 per cent for the Australia-born. Accordingly, the unemployment rate for migrants was, at 5.6 per cent, higher than for those born in Australia (4.9%). Further data with respect to labour force status for migrants is presented in Appendix 3A.1 (with reference to Tables 3A.1.4 and 3A.1.5).

connotations such as job dissatisfaction or difficulties with adapting to conditions of employment in a new country. Temporary business visa holders (33%) were least likely to change and holders of humanitarian visas (45%) most likely. For many people, changing jobs is associated with uncertainty and stress. Employment status, how migrants handle job changes and whether occupational changes are regarded positively could impact upon not only economic but also social wellbeing of individuals as well as others within affected households.

Results from the LSIAs which have permitted the educational qualifications and work status of more recent migrants to be tracked are explored and discussed in Appendix 3A.1 (with reference to Tables 3A.1.6 to 3A.1.8). In short, recent migrants have increasingly contributed to human capital in Australia by adding significantly to the pool of persons with qualifications. Predictably, not all qualifications held by migrants can be put to most effective use immediately upon arrival in Australia. Nevertheless, the longer migrants were in the workforce, the more, generally speaking, they were able to use their qualifications. This suggests that, with growing familiarity, employee skills could be better matched to workplace tasks.

Migrant workforce characteristics

It is important to note that controls on migrant intakes in the 1980s and 1990s meant that Australia did not develop a multicultural workforce on the same scale as in the USA and European Union (Jupp 2002). As a result, residential differentiation in Australia has not led to the same marked variations in quality of life that are evident in some places overseas.

There is nonetheless a danger of overlooking the divide between those immigrants who do well and those who experience difficulties (Jupp 2001). While members of some Asian groups have faired relatively poorly in labour markets (Hugo 1992; Viviani 1997), this camouflages the fact that many have been highly successful. Indeed, Asian male immigrants have been found overall to occupy positions equal to or even better in status than Australia- born males (Evans 1985). Yet in spite of the obvious success of many immigrants, some researchers (such as Jayasuriya and Kee 1999) have pointed to extremely poor rates of Asian-Australian representation existing in key sectors of the Australian workforce, such as in federal and state public services, university governance, government advisory bodies (including those dealing with Asia-Australia relations), corporate leadership and the media. These differences are apparently not explained simply by degrees of fluency in English.

On balance, little evidence was found in the literature of a migrant labour underclass forming in Australia in spite of recognition that humanitarian migrants have been among the worst affected by economic restructuring, with the added burden of social exclusion resulting through unemployment, welfare

dependency and poverty (Castles et al. 1998). Nevertheless, there are indications that overt discrimination has occurred in the labour market (Collins

1991), especially with respect to youth (Burnley 1985) and those from visual ethnic minorities. Lack of fluency in the English language can present as another barrier.

One of the keys to the successful adaptation of migrants in Australia is their proficiency in the use of the English language. This influences the degree to which new settlers are able to interact with the host society and to find employment in skilled occupations. Of course, levels of proficiency in English vary significantly according to place of birth. The major birthplace groups with language difficulties (in the sense of not speaking English well if at all) were from various parts of Asia including Viet Nam, China (excluding Taiwan and SARs) and South Korea where around one in three did not speak English well. Migrants from Turkey, the Former Yugoslav Republic (FYR) of Macedonia, Lebanon and Croatia had problems speaking English to even greater degrees. Difficulties with the English language are not however confined to these areas or to recently arrived migrants. In some long-established groups, between one-fifth and one-third of ethnic populations speak English not well if at all; this included migrants from Greece or with Greek ancestry (32%) and Italy or with Italian ancestry (22%). (Refer to Appendix 3A.1, Tables 3A.1.9 and 3A.1.10, for further statistics and discussion).

One aspect of human capital that is difficult to measure is the extent to which migrants bring with them language skills which add not only to Australia’s cultural diversity but also to the ability of Australia to interact and trade with other nations. This obviously brings significant social benefit to Australia. Some of the settling-in difficulties for new migrants are also alleviated if they are able to communicate using familiar languages. That one in five Australians has some capacity to speak languages other than English is some indication of this linguistic resource (refer to Table 3A.1.11).

A striking feature of linguistic diversity is the huge range of languages spoken in Australia. Whilst on the one hand this represents a significant addition to Australia’s stocks of human capital, on the other hand, educators and trainers are being faced with different and more numerous challenges as a result of greater diversity.

Challenges faced by education systems

English language competence is recognised as a key to socio-economic adjustment in the wider society (Burnley et al. 1997). Nonetheless, misgivings about the scale of resources necessary for training for those from non-English speaking backgrounds persist (Iredale 1997; Matthews 1992). This concern extends to the schooling of immigrant children where a number of factors relating to migrant intakes impacts on Australia’s education systems. These factors include unplanned-for fluctuations in migration levels; high proportions of refugee and other humanitarian migrants in some areas; greater religious and linguistic diversity within intakes; and broader geographical dispersal of ethnic minority students (Cahill 1996).

Resulting competition for scarce resources has meant that the education outcomes for recent first generation young migrants are sometimes presented as being mixed and uncertain. There are also assertions that English as a Second Language (ESL) Programmes originally provided in the main by the Commonwealth have not been sufficiently supplemented by State government initiatives. This is despite the fact that explicit curricula or curriculum framework documents are in place for second language support in some states including NSW, Victoria and the ACT (ACT Department of Education and Training 2003; OECD 2006).

In spite of these concerns, a recently released OECD (2006) report that examined performances of students with immigrant backgrounds and compared them to those of their ‘native’ counterparts found that Australia was one of a handful of countries, which included Canada and New Zealand that performed well. Furthermore, the analysis found that background characteristics of students in Australia were more similar whereas in most European countries, immigrant students were from lower socio-economic backgrounds and had parents who were often less well educated than in the rest of the population.

Despite some misgivings, second and, to a lesser extent, third generation immigrant Australians generally do well, as evidenced in the merit lists at the end of secondary education (Khoo et al. 2002). Nevertheless, a dichotomy is evident in tertiary education. Although permanent resident students who have English as a second language overall have higher participation rates than English-speaking-background Australians – for Chinese, Korean and Vietnamese speakers, the level of participation is striking – there are some other language groups (including Italian, Macedonian, Turkish, Greek and Croatian speakers) which are underrepresented in universities relative to their population (Dobson et al. 1996).

Competition for skilled labour

In more recent times, Australia has developed the business of export education, demonstrated by numbers of temporary entry students. By way of example, overseas students make up over 18 per cent of enrolments in Australian universities (ABC Radio Australia 2005) and during 2004-05, in excess of 225 000 international students were granted visas (DIMA 2006b). There has been increasing emphasis on the skilled stream and on overseas students training at their own expense and, in some cases, subsequently taking out permanent residence (Birrell et al. 2005; Garnaut 2002). On the downside, there is an oft-expressed view that many overseas students, particularly ones from Asian countries, are not sufficiently proficient in English to effectively participate in the workforce once they are qualified (Birrell, Hawthorne and Richardson 2006, The Age 2006).

Despite these schemes, Australia still experiences shortages of skilled labour. These shortages underscore what appears to be generally widespread support by employers for continuation of existing federal government policies to increase opportunities for people to convert from long-term temporary visas (under which Australia has no obligation to provide jobs or social security) to permanent onshore immigrant status (Jupp 2002; McDonald 2002). Increasingly employers have a global view of labour recruitment, recognising sponsored temporary skilled workers as essential for successful operations (Khoo et al. 2004). While there appear to be many advantages for Australia of temporary visa migrants (C. Richardson 2002), little is known of their migration experience or whether training of Australian residents might present a better long-term option.

Immigrants do not take jobs for which people in the Australia-born workforce are qualified. On the contrary, migration helps to alleviate labour shortages but it is not a substitute for natural population increase through births. Fertility and immigration do not have equivalent impacts on long-term population size and age structure (Kippen and McDonald 2004). Competition for immigrants on a global scale, together with an expected shift to lower fertility rates almost everywhere (AIHW 2004), could make recruitment of short and long-term visa entrants in areas of skilled shortages increasingly difficult.

Migrants are credited with raising the bar on Australia’s per capita reserves of human capital due to overall higher qualifications and greater skills levels at time of arrival than the Australia-born. However this capital might be under- utilised due to potential transferability gaps emerging in the application and recognition of post-migration qualifications.

In addition, superior economic outcomes from migration are claimed on the basis that, due largely to government policies and types of visas issued,

migrants have overall lower welfare recipient rates. This does not apply to some identifiable migrant groups including humanitarian and preferential family entrants and some from non-English speaking backgrounds who experience communications difficulties and thus fair relatively poorly in labour markets. Naturally this leads to claims that education in English and ESL courses are under-resourced.

Of course unplanned-for fluctuations in levels, composition and dispersal of migrants do impact upon the effectiveness of education systems. Unfortunately, immigrant representation and performance in different sectors of society have not been monitored which limits the ability to gauge patterns relating to social impacts as they emerge in the workplace, in education systems, and with respect to welfare payments.

Interpretations of costs and benefits of migration to Australia with respect to work, welfare payments, workplace skills and education are summarised in Table 3.2.